Naturally arising regulatory CD25+ CD4 T cells play an essential role in regulation of immune homeostasis. However, specific molecular mechanisms regulating their differentiation and activity have been largely unknown. We have found that forkhead transcription factor Foxp3 is specifically expressed in regulatory CD4 T cells and is required for their development and function. Although identification of Foxp3 as a critical molecular mechanism establishing regulatory T cell differentiation program is a major breakthrough, it remains unknown what are Foxp3 target genes essential for this program. In addition, our findings raise an important question as to why there is such a discrepancy in the severity and onset of the autoimmune syndrome in a genetic model of CD25+ CD4 regulatory T cell deficiency in Foxp3 deficient mice and in murine models relying on elimination of CD25+ CD4 T cells. We propose several possible non-mutually exclusive hypotheses to explain this apparent controversy: a) In addition to CD25+ CD4 T cells, Foxp3 is expressed by an unidentified subset(s) of CD25- CD4 or CD8 T cells with the regulatory function capable of providing some measure of protection from autoimmunity in mice subjected to acute depletion of CD25+ CD4 T cells; b) In the absence of Foxp3, T cells with an increased TCR affinity for self peptide/MHC class II complexes that normally develop into regulatory CD25+ CD4 T cells instead become pathogenic and largely responsible for the rapid disease progression; c) A subset of CD25+ CD4 T cells with autoreactive TCR lack Foxp3 and may represent a major population of autoreactive T cells normally controlled by Foxp3 expressing CD25+ CD4 regulatory T cells; d) Foxp3 expressed at a low level in nonregulatory CD4 T cells controls thresholds of activation, dependence on co-stimulation, or anergy induction. In this proposal we will address the aforementioned questions using genetic approaches including Foxp3 protein and mRNA reporter mice, conditional deletion and induced expression of Foxp3 gene in vivo and in vitro in combination with functional and molecular analyses. The following specific Aims will be pursued: 1. To investigate Foxp3 protein and mRNA expression and their regulation during thymic development (Aim 1a) and a role for Foxp3 in negative selection of T cells in the thymus and to evaluate autoreactivity of T cells with the Foxp3 deletion (Aim 1b). 2. To investigate Foxp3 protein and mRNA expression and to assess regulatory function of distinct Foxp3+ T cell subsets (Aim2a); to investigate Foxp3 protein and mRNA regulation in peripheral T cells and to explore, thereby, possible generation of Foxp3+ T cells in the periphery (Aim 2b); to test a requirement for Foxp3 expression in maintaining regulatory T cell function (Aim 2c). 3. To investigate potential cell-intrinsic role of Foxp3 in controlling activation, central and peripheral tolerance induction in non-regulatory CD25- CD4 T cells. 4. To identify molecular targets of the Foxp3 gene involved in regulation of regulatory T cell development and function.